The ongoing trade tensions between the United States and China present a major opportunity for India. In recent months, India has been gaining traction as a manufacturing hub. Various multinational manufacturing companies such as Foxconn, Pegatron Corporation, WinstronCorporation, Volkswagen, Hyundai Motor Company and Honda Motor Company are evaluating India as an alternative to China. However, we believe that the government is planning to take steps to increase the competitiveness for companies in India.
Corporate tax reduction likely to improve competitiveness With effect from Fiscal Year 2019‐2020, the government has already slashed the statutory corporate tax rate to 22% for existing companies, from 30% earlier. Additionally, the policy states that manufacturing companies incorporated after 1 October 2019 will get an option to pay 15% tax, slashed from the previous 25%. We believe that the lower corporate income tax rate should enhance India’s competitiveness vis‐à‐vis other potential manufacturing hubs in Taiwan and in Southeast Asia, such as Vietnam, Thailand and Indonesia. We expect India to benefit from lower tax rate than the global average corporate tax rate of 23.8%, and the Asian average of 21.1%. This tax rate concession should leave the companies with more cash for investment and expansion and persuade them to remain and expand in India. We have analyzed the industrial and warehousing sector across India’s seven major cities covering key trends evolving in the sector due to various demand drivers leading to emergence of new micromarkets.
– Colliers Research